After a period of much uncertainty associated with the pandemic, it became clear that large parts of the economy were very resilient. Optimism began to sprout in the property market – particularly the office and logistics segments. The combination of dependable cash flows, low alternative returns and reasonably priced financing stimulated investor demand.

We have registered a total of 351 transactions for about NOK 115 billion in 2020. The number of transactions has never been higher and – if we exclude 2015, when the figure was heavily affected by a few large portfolio transactions – the volume also set a record.

The industry-specific economic downturn was reflected in the transaction market. Demand for logistics properties has never been stronger. The pandemic has permanently strengthened the position of online shopping. Low alternative returns also increased the value of long leases.

Pure logistics buildings were involved in 45 transactions amounting to about NOK 13 billion during 2020. Including combined-use and industrial properties brings the total to 97 transactions with an overall volume exceeding NOK 20 billion.

Interest in residential developments has continued to rise, with turnover here also higher than ever. We have seen a trend towards new players constantly becoming involved in this market. An example is provided by Norwegian Property and UNION Real Estate Fund III, which joined forces with Fredensborg Bolig to acquire Veidekke Eiendom. Club deal arrangers have also become more visible here, organising residential property projects for about NOK 2 billion in 2020.

At the other end of the scale are hotel properties and certain parts of the retail segment. Hotel-related activity virtually ceased in 2020, with only four transactions. High-street retail also saw few transactions, but showed signs of improvement towards the end of the year. Immediately after 1 January, for example, it became clear that Victoria Eiendom was selling Karl Johans gate 12 J to a fund managed by Malling & Co.

The transaction volume in the office property market ended on a par with earlier years. However, we have seen great interest in prime assets. Several attractive properties were snatched up before the bidding round. Examples include Tjuvholmen allé 1-5 and the Telegraph Building in the Kvadraturen district.

The final quarters of 2020 were driven to a great extent by financial players, and club deal arrangers were behind a substantial share of the purchase volume. They accounted for a record volume of NOK 35.5 billion last year. No less than 70 per cent of the transactions took place in the last two quarters. This buyer category was again the biggest net purchaser, increasing its exposure by about NOK 17 billion.

Foreign investors also increased their exposure to Norwegian commercial property last year. Despite closed borders, 13 purchases with a combined value exceeding NOK 12 billion were made. The volume was thereby higher than in 2019 and on a par with the average for the past four years.

Several factors indicate that 2021 will also be an active year in the transaction market. Vaccination has begun, and the signs are that we will see a normalisation in the second half. That will lead to an improvement in the macro position, which would undoubtedly be positive for the property market.

Some clouds are nevertheless visible on the horizon. We have seen a broad fall in yields in several segments, and the most attractive office and logistics buildings are more expensive than ever. In addition, long-term interest rates have risen substantially since bottoming out in May, and the yield gap has narrowed sharply. On the other hand, the number of buyers is still high and, all in all, we expect an active market in 2021.